The markets are awaiting later today, Wednesday, May 3rd, the US Federal Reserve meeting to announce monetary policy and interest rates, after the FONC Open Market Committee began its meeting yesterday, Tuesday, as expectations indicate that the US Federal Reserve will raise interest rates by 25 basis points, to reach 5.25% at the highest level. levels since 2007.

The latest data for inflation before the relevant Consumer Price Index (CPI) showed an increase of 0.1% in March after an increase of 0.4% in February, while the core index excluding food and energy prices rose to 0.4% compared to 0.5% in February.

On the other hand, the annual index increased over the past 12 months to 5.0% from 6.0% in February, while expectations were for a rise of 5.1%.

The annual core index, excluding food and energy prices, fell to 5.6% on an annual basis in March from 5.5% to match. for expectations.

On the other hand, the US Federal Reserve’s preferred index of consumer spending (PCE) slowed in March by 0.3%, or by 4.6% on an annual basis.

Forecasts for future contracts by the FEDWatch tool from CME now see an increase of 25 basis points in the May meeting, by 86%, so that levels of 5.25% are the levels of peak interest rates, while it sees a reduction of 25 basis points in interest rates at least in the fourth and last quarter of this year.

With inflation rates stable and slowing continuously, and the banking crisis looming on the horizon with the bankruptcy of about three banks so far since the beginning of the year, the US Federal Reserve may hint that it will stop tightening monetary policy in June to support the banking sector, but it is not expected to give any signs of changing monetary policy and reducing monetary policy.

Interest rates this year, as stated in the last meeting of the Fed, and accordingly, the markets will monitor Powell’s statements regarding this issue, which will be the main driver for the markets in the coming period.

expected movement scenarios

A cut of 25 basis points and Powell’s hint that the Fed may stop raising interest rates and will monitor inflation as a result will support the US dollar’s declines and US stocks and metals will rise.

A rate cut with a tightening look from Powell and the hint that the cut may not be the last and that the Fed is determined to reduce inflation and that the Fed did not discuss cutting interest during the rest of the year will support the rises of the US dollar and rises in stocks.

Keeping the US Federal Reserve on interest rates unexpectedly will have a greater impact on the markets and the US dollar, which is expected to decline strongly.